Secrets of Florida’s “Foreclosure King”

New insights into how foreclosure mills operate have emerged in Florida, where the state attorney general is going after David Stern, a lawyer known as the “Foreclosure King.” Stern’s business model was based on volume and his firm was paid $1,400 to produce documents for each foreclosure. That put a premium on churning out the documents fast and the firm became adept at doing exactly that. According to a deposition of a key Stern employee, taken by the attorney general’s office, over 1,000 foreclosure documents were sometimes signed in a single day without being reviewed and without any witnesses present, as required by notarization rules. Often signatures were forged. (Read the deposition to get an inside look at how a foreclosure mill operates.) One paralegal claims she was fired after refusing to falsify documents. Asked about the investigations into foreclosure fraud, the paralegal, Tammie Lou Kapusta, told ABCNews.com: “This is just the beginning really. . . . It’s the tip of an extreme iceberg.”

Stern’s firm filed a staggering 70,382 foreclosure cases in 2009 and reportedly billed nearly $100 million. As explained by the deposed employee, Kelly Scott, the firm was always under heavy pressure from lenders — including Fannie Mae and Freddie Mac — to speed up the processing of documents.

The case against Stern is still under investigation and no charges have been filed against him. Stern’s lawyer says that the campaign to vilify him is unfair and advances the interests of “a well-organized defense bar who is making a lot of money keeping people in their homes.” Others say that it’s the banks that are to blame for the existence of foreclosure mills in the first place, which is a good point.

One thing that is clear, though, is that Stern has done very well for himself thanks to the misery of others. He reportedly owns a $20 million yacht, a $15 million mansion, and several other expensive properties. Along with the bankers who have made record profits due to the Fed’s zero interest lending, Stern is an example of those who have prospered as a result of the financial crash. Greed, it turns out, thrives in both good times and bad.